We had a week ending on October 05. We had another week ending on October 12. All of us know now how the markets can change over a period of one week, at times to our detriment. The market recovered the entire NIFTY loss of Thursday on Friday. The explanations given for the fall on Thursday like Trade Wars between China and USA, uncertainty due to state elections etc all proved invalid just next day. Both the factors are still present but market chose to go up and experts had to manufacture new reasons to explain the up move.
So much for the reasons and explanations.
A gain of 237 points. A big smart gain. We are back where we were two days ago. On Wednesday, NIFTY had closed at 11460. Two big moves , one down and another up just helped in options values going down and providing some talking points. Otherwise nothing much has changed.
We saw one again how the market cues do not always work out. SGX NIFTY was mildly up on Friday morning. No one anticipated the 237 point up move.
This is what the up move did to our options positions:
Our profit has come down considerably. This reminds me of July series where our profits was reduced almost to one third position.
This is quite normal with option buying trades. The key is to manage the profitable trades rightly.
On Friday, while everything else was going wrong, SBIN stock did not show much strength even though NIFTY and BANKNIFTY kept moving up all day. It gives some hope that all is not well here and we may see a bigger decline in case of NIFTY making a down move.
Markets will be volatile. Let s accept this fact. The daily up and down moves teach us many valuable lessons.
New Trade :
We keep looking for new trades.
TATAMOTORS made a low of Rs. 170 on October 09, 2018.
Now it has recovered to Rs. 183.90 on Friday. But on Friday while NIFTY was moving higher, TATAMOTORS was lagging. This is not our normal way of analyzing a potential trade, but it still is a signal.
PUT 180 at Rs. 5.50-6.00 would be my trade. Maximum loss could be Rs. 9000.
This will become our seventh open trade.
Disclaimer: This post and examples are for teaching purpose only and are not meant as advice/suggestion to trade in these stocks. Trading in Futures and Options can lead to big losses and should be done with appropriate knowledge and advice only. Mentioning the stocks here does not imply that I have a trading position or likely to take a trade in these stocks.
LN SINGH October 15, 2018 at 8:18 am
I am sure that with your excellent analysis the trade will go well.Reply
admin October 15, 2018 at 9:12 am
Let us hope it turns out that way.Reply
Santosh Bhat October 15, 2018 at 9:07 am
You should also consider TCS if you are thinking that way.Reply
admin October 15, 2018 at 9:15 am
You are right. I have not selected because I am not familiar with the stock price moves of TCS.Reply
It fits the criteria. These posts are meant to create a habit of looking for trade set up. It looks the purpose is being served.
Tharik October 15, 2018 at 10:17 am
I took TECHM 660 PE @6.65 today… Hoping that it will come down to 620-630 levelsReply